Obama needs to hit back and hit back hard on this "Government isn't the solution to the problem, Government is the problem" nonsense dating back from Ronald Reagan.   The "government" that John McCain complains so bitterly about is his party's Government.  I find it amazing that having controlled most, and at times all, of the levers of power since 1980, Republicans can rail against "government", "those folks in Wasington" and regulation.  Read T.A. Franks' new book "The Wrecking Crew".  

McCain's line is indeed as risible as it is predictable.  But as much as Obama's response to the crisis may be politically astute, is it true?  Does the collapse of Lehman have anything at all to do with Bush-era financial deregulation and regressive tax policy?

I don't profess to know about such major financial matters in any kind of detail, but I thought that the root cause of today's events was the real estate bubble which in turn was fueled by the doubling of the world's money supply--lot's of cheap capital chasing too few legitimate investments attaching itself to illegitimate mortgage-based securities for lack of any alternative.  For McCain to try to blame overregulation as the cause of Leman Bros' collapse is laughable, but does Obama come off any better.  

Give Obama some time.  A quick response, as is the case with McCain's response, is not a thoughtful response.  So far the DOW is definitely not in meltdown.

"?" that is.

FDR is dead.  Calling Barack Obama.

This is the perfect opportunity for Obama to carve up Bush and McCain at the same time by castigating the cowboy, anything goes mentality in Washington and tying it directly to McCain and his crew of lobbyists --

"The foxes are not just watching the henhouse, they are sitting down, setting up tables and chairs, and dining at their leisure, all because John McCain and the Republicans are in bed with the lobbyists.  John McCain is a gambler, a regular customer of casinos where he bets amounts on dice that would curl your hair.  That's his money he is losing.  But are we going to let him gamble with our money and our futures?  When John McCain and his cronies play, it is Main Street America that pays."

Come on, Senator Obama, how many more golden opportunities are you going to get?  Get out your shiv and start using it.

Obama's answer to this and nearly everything on the economy is "And if we keep spending $10/billion per month in Iraq, expect more of the same.  I repeat: $10 BILLION per month in Iraq -- this is what John McCain promisses.  I promiss to end it.  Choose."  

Obama would do well to let the Red Meat Republicans bury themselves in Hooverian rhetoric first, before responding.  It is not a sign of strength to be the first out the door with simplistic solutions to complex problems; it is not good politics to lead with your chin, as McCain has done.  Obama is consulting his advisers and assessing the political climate, as he should and as we would expect any sound leader to do.

Yes, aeromonas, there is a direct relationship between Bush's colossal budget deficits, the trade deficit, and the recycling of the excess offshore investment dollars generated thereby into ginned up mortgage securities -- not that Obama has the slightest reason or need to explain the macroeconomics to the public.

THE CANDIDATES REACT TO WALL STREET.... Given the trauma on Wall Street this morning, it wasn't too big a surprise to see both of the major-party presidential campaigns issue statements on the developments. The McCain campaign's message, though, needs

I am comforted by the fact that if Sen McCain is elected, Congress will never pass the more Norquistian elements of his domestic agenda, assuming he would even push for them himself.

«John McCain issued a statement today on the financial crisis in which he blamed government “regulation” for what happened: McCain declares, "We cannot tolerate a system that handicaps our markets and our banks and places at risk the savings of hard-working Americans and investors.” That’s 1920s Republicanism—and exactly what one would expect from a candidate whose chief economic advisor was former Sen. Phil Gramm. »

This is not 1920s Republicanism. This is economic religiosity and inherent blindness of the worst kind. This is the same as saying, after Magalhaes has surrounded the globe, that the world is not round but flat.

BOYS, wake up! Those guys did not fail because they were "regulated"! They failed because they were greedy. Greed is NOT good! The free deregulated market FAILS. And today, as in 1929, we are watching a spectacle of market failure.

If there was regulation, perhaps they had to have some reserves or they had to have other types of risk management and risk control.

"Obama would do well to let the Red Meat Republicans bury themselves in Hooverian rhetoric first, before responding."

Yes perhaps. But at the same time, I'm affraid that many Americans will actually believe that the world is flat. After the Sarah Palin phenomenom I'm loosing all hope in the American public.

"Does the collapse of Lehman have anything at all to do with Bush-era financial deregulation and regressive tax policy?"

Deregulation, yes.  Tax policy, probably less so, but arguably a contributor.

I have spent a good deal of time in the financial services industry in a professional capacity in the last 4 years.  It is clear to me at least that both the fact of deregulation (although in fairness, the big step, the repeal of Glass-Steagall was done before he took office, and only implemented, not instigated by Bush and company), and the attitude toward regulation contributed directly to the subprime mess, and the alacrity with which these big institutions buried their risk in off the books entities.

The regressive tax structure contributed only indirectly - if your tax policy encourages and rewards fast turn on investment, and get-rich-quick, people will focus on that.  Guaranteed, every time.

McCain this morning: "You know that there's been tremendous turmoil in our financial markets and Wall St. And it is -- people are frightened by these events. Our economy, I think still -- the fundamentals of our economy are strong. But these are very, very difficult times."

If Obama doesn't rip him on this personally, I'm going to be very disappointed.

As for the comment about how to handle, the issue in my mind is that it can't be wrapped in a sound bite (McCain tried with his 'tying hands' comment). A better idea would be to show competence, a steady hand, and intellectual depth in the area, but explaining how to manage the crisis woudl bring snores.

"The foxes are not just watching the henhouse, they are sitting down, setting up tables and chairs, and dining at their leisure, all because John McCain and the Republicans are in bed with the lobbyists.  John McCain is a gambler, a regular customer of casinos where he bets amounts on dice that would curl your hair.  That's his money he is losing.  But are we going to let him gamble with our money and our futures?  When John McCain and his cronies play, it is Main Street America that pays."

You go Roi!

As an ex-stockbroker (Edward Jones, thank God), and with a BBA and MBA in economics, I would agree that lack of regulation (or pisspoor enforcement) helped cause much of this.  The real estate bubble certainly assisted by ramping up the volume of capital we are talking about, but ever lessening constraints on corporations is not the answer, neither should we choke the market with too much regulation.

Whoever enters the White House has a huge job ahead on many different fronts(economic, Irag, energy, the lawlessness of the current administration, etc), it's time for somebody smart, deliberate, and willing to surround himself with other smart, deliberate people.  That isn't the Republican party, they exemplify the Peter principle.

Obama '08, and may God help him with the mess he inherits.

Yes Ryan but wouldn't a McCain presidency have veto power over any meaningful reforms agreed by Congress on pretty much anything? (Am I right about that?)

How off the f*cking wall mentalist nut job crazy is McCain at this point?

Roi's right, throw in the repeal of the last regulatory leeve, Glass Seagall, by that hero of the working man, Clinton and you have the present crises.

The problem is not enough regulation! Clearly, demonstrably, without question, matter of fact, impossible to deny...

This isn't a Republican v Democrat; Liberal v Conservative question. It's medievel superstition v The Enlightenment.

He actually comes out and claims it's government regulation that is the cause of the credit crunch!!!! As well as proposing massive new tax cuts with these record deficits that even that hero of the working man, Greenspan can't stomach!!!!!!!!!!!!!!

Really and truly, this guy is dangerous. Not just for American's but for the rest of us as well.

I'm just speechless at this point. I would have thought that they, at the very, very least would have tried to fudge the issue, play for time, parade the beauty queen for a more cycles etc etc.

But to come out and claim that Big Government is the reason for this financial crises is just in...inf*ckingsomething.

McCain wants to kill you, murder your family then blow his brains out on your lawn. What a depressing election debate this is turning out to be.

Biden is giving a big speech on domestic policy today.  Let's see if he adjusts his text to deal with the current reality.  I expect Obama will follow suit.

John, the irony is this week, the next month and the next year will produce the horrors which should have conservatives pounding their fists on the table. Greenspan compares the banking disasters to the worst we've seen since 1907. The 'new' deficit number for next year is half-a-billion rather than the $200 billion that was predicted in January. And for weeks McCain has been allowed to wage a campaign that placed an unknown VP pick and demanded people vote up or down on her.

Democrats don't have clean hands but I think the most sober Republican would admit Rubin would have done a better job of keeping the foxes out of the hen house.

No, the only way McCain's craven rhetoric of Rove can really be exposed is if a handful of minds on the right draw the line and refuse to endorse the GOP's fiscal and energy policies. Those are not single issues and the cascading consequences already have momentum down and McCain lacks the courage to intervene.

We may look less to Colin Powell to buck up Obama on the wars because Iraq and Afghanistan will be addressed with a frail force and by the Generals who Obama won't ignore. The Joint Chiefs aren't going anywhere but those who understand domestic and international markets aren't being fooled by "1920s Republicanism". I believe this has risen above party. The losers as the months pass won't be easily bought off by McCain's foolish analysis. Sure, "ignoring middle-class Americans" is not untrue but Barack needs for McCain to be smacked down by a silent minority on the right who doesn't give a shit about gays, guns and god.

I don't think the Obama Team is insular but there is a difference between a tight message, controlling the battle against McCain and denying that an appeal to people on the other side isn't losing face. He needs to convene a conference for more than a morning and allow them to issue a 'verdict'. Obama came through with a cautious choice for VP and the best way to expose the folly of McCain's trash talk is to issued a statement over the signatures of people who are trusted for what they've done rather than what they say.

It could be an "Ike" going to Korea only Barack has to seek mediation before 11-4. Not just him, not just his gang and not just Democrats. He has to elevate the Economy to a universal concern and needs some heads from the right to pull it off. I think they're willing but they aren't going to make the first move.

"But to come out and claim that Big Government is the reason for this financial crises is just in...inf*ckingsomething."

The perspective of a McCain/Palin America is starting to look like a Waco siege on a grand scale.

McCain is dangerously ignorant - breathtakingly so.  

He and Phil Gramm are poster children for how chilling ideology in action can be. Like a mental iron curtain.   This man is a menace.  

I can only pray he loses.

At least I know that most people in the know - the fed, the NY fed, and all the people who actually run the capital markets know better. On the economy, McCain has consistenly been a ridiculous, embarrassing figure.

Dick Fuld - only 20 million in stock how, huh homeboy?  Sheeit, bet you can barely gas up the plane for a couple of years on that pittance.

Karma's a bitch huh?  I guess its comon knowledge in the media now what a totally arrogant, entitled man he is.  That man had the biggest karma bulleye on his back I've ever experienced  (sorry, but I know first hand what a hateful jerk this guy is).  

He's a perfect symbol of the George Bush era:  of course he's a major contributor to and Friend of GWB, his entire firm was very George Bush-esue:  a bunch of synchophants taking orders from a few gangsters at the top who were set for life. Gangsters who squashed anything resembling independent thought, let alone entreprenuership.

Nice to see so many of you up bright and early this fine morning. In case you hadn't heard, the economy has never been better, and, with today's fresh infusion of optimism, is up and roaring...right over the cliff.

Uh,  a "system that handicaps our markets and our banks and places at risk the savings of hard-working Americans and investors...isn't that the definiton of Gov/Fed) control of our money supply and its' unrestricted power to inflate, i.e., Big Government?!  If that's what McCain's talking about he's accurate but he offers no solution. But does Obama either? Will UHC or whatever paid for by more money printing push back the day of reckoning that is surely coming? And adjusting tax rates here and there won't do it. Taxes almost don't matter anymore(when you can borrow/inflate) as Gov is not restricted by the lack thereof in waging wars/programs that are "not good for children and other living things" as we used to say in the 60's.  

Almost every other advanced industrial society manages universal health care without bankrupting themselves.  Maybe, strike "almost."  They are helped by not having employer-based health plans, and also by having significantly more assets go into actual care rather than admin costs or insurer profits.  No UHC system involves "the government" telling people which doctor they can see.

We're not Germany or Canada, and we won't be recreating their systems, but if everyone else can do it surely we can too, in a way that suits conditions in the U.S.

McCain made the point quite well that the current laws are antiquated and fractionalized:

"Wall Street turmoil underscores the need to overhaul "the outdated and ineffective patchwork quilt of regulatory oversight in Washington," Republican presidential contender John McCain said Monday...

"It is essential for us to make sure that the U.S. remains the pre-eminent financial market of the world. This will be a highest priority of my administration. In order to do this, major reform must be made in Washington and on Wall Street," McCain said in his statement.

He added: "The McCain-Palin administration will replace the outdated and ineffective patchwork quilt of regulatory oversight in Washington and bring transparency and accountability to Wall Street. We will rebuild confidence in our markets and restore our leadership in the financial world."

Chan - this quote of yours says absolutely nothing of substance (shock!).  McCain hasn't the first clue what he is talking about, lets not even talk about the gruesome Mrs. Earmark.

ChanRobt  wrote, "McCain made the point quite well that the current laws are antiquated and fractionalized"

But he sounds like a new coach coming to a team with a rich heritage and 8 losing seasons: "It is essential for us to make sure that the U.S. remains the pre-eminent financial market of the world."  We had three try that bullshit at Notre Dame. See, "rebuild confidence" is a result of seeing all the details are covered and not just saying we won't get our asses handed to us. It is only temporal or a pitch because the competition wishes the same result and will continue to win with the same and greater advantages they've used to knock us around.

This current mess is broader-deeper than real-estate, banking so "major reform must be made in Washington and on Wall Street" doesn't begin to address what McCain ignores. His lack of comprehensive energy, education and health care policies are three items on a long list where the US is behind the curve in this big game because his party believes they can screw most of the population and still "restore leadership" in the world.

His entire convention was an appeal to the 'good old days' as if we will lead by using fifty cent gas, the doctor will be making house calls and an economy going 24/7 with workers who can't read or write will generate necessary revenue.

I live ten miles from Michigan and he shows not a clue how to rehab them & we won't lead anyone while tens of millions of Americans are off the 'to do list' of the GOP.

McCain won't reform away the barriers which have frozen the progress of the vast majority and that's why any nation succeeds or fails. Yep, he's promising to coach us back to the top but won't feed the team, give them the skills to win and doesn't seem to recognize how and why the opposition is winning.

The biggest issue here is Fannie Mae and Freddie Mac, worth thousands of Lehman Bros each.

Republicans, especially McCain, have long pushed for a structural overhaul of Fannie and Freddie. By contrast, Democrats have warned against making major changes. The two companies have traditionally had stronger backing from Democrats, who support their mission of bolstering affordable housing (read "sub-prime mortgages") and for years have fended off calls for greater oversight.

Democrats received 56% of some $1.6 million in contributions from the two companies in the current election cycle, according to the Center for Responsive Politics. Obama has received $105,849 from donors tied to the companies since he ran for the senate four years ago, making him the third-largest recipient in Congress among the top 25 listed in a recent report by the group. McCain wasn't listed in the report, and proponents of overhaul say lobbyists have tried unsuccessfully to win him over for years.

56% to 44% doesn't seem like a chasm -- the lower figure isn't nothin' and the small donor base for Obama does give him at least the potential for not being influenced too much by a donation of $106,000.

I agree that the dynamic of profits going private while risk goes public makes one uneasy, and that public-private enterprises can be fuzzy and potentially corrupt combinations.  That said, it seems to me that the tendency to want to be bailed out by the taxpayer when things go wrong is rather widely spread throughout various sectors (airlines, financial services) of the economy.

Most likely, neither candidate really knows exactly what the hell is going on, or what can be done to fix it. But they'll try, damn it, they'll try.